KiwiSaver: compulsory employer contributions (CEC)
When to make compulsory employer contributions
Important
From 1 April 2009, compulsory employer contributions increase to 2% of an employee’s gross salary or wages.
Paying less than the minimum compulsory employer contribution
In some cases the CEC can be less than the minimum required amount, such as when:
- the employee is under 18, and/or
- the employer is making registered super scheme (RSS) contributions for the employee.
Employer is making registered super scheme (RSS) contributions
From 1 April 2008 to 31 March 2009, an exception to CECs can apply where an employee:
- joins KiwiSaver, and
- is already receiving contributions to an RSS at the rate of 1% of their base salary.
Employers will need to make additional CECs where 1% of employee's total gross income (less redundancy etc) exceeds the RSS contributions for that employee. As these additional employer contributions are to a KiwiSaver scheme, the entire additional cost is likely to be offset by an increased employer tax credit (ETC) claim.
Refunds to employers
Refunds for contributions made in error
The employer is entitled to a refund of the KiwiSaver CEC made in error if:
- an employee has an existing superannuation scheme, and
- the employer has been making:
- KiwiSaver compulsory employer contributions (CECs), and
- employer contributions to the existing superannuation scheme as well.
The employer will need to make adjustments to their Employer monthly schedule (IR348) and request the refund from us.
If we have already passed on the contributions to a scheme provider, we will request the refund from the provider and we will return the amount to the employer.
Refunds if an employee opts out of KiwiSaver
If an employee opts out by completing an Employee opt-out request (KS10), the employer is refunded all compulsory and non-compulsory contributions for that employee.
Compulsory employer contributions and employee opt-outs due to existing superannuation schemes
If an employee has an existing superannuation scheme, the employer must make CECs into the employee's KiwiSaver account until the employee:
- officially opts out by completing an Employee opt-out request (KS10),
or
- gives the employer details of their existing scheme, and
the existing scheme contributions qualify to offset the employer's CEC obligations.
Important
Employers cannot delay their CECs while waiting on details for the employee's existing superannuation scheme.
We will refund the employer all compulsory and non-compulsory contributions after we receive the opt-out request for the employee.
Date published: 24 Mar 2009
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